Allahabad HC Order Dt. 6 November 2023
Allahabad HC Order: In a recent landmark judgement, the Allahabad HC has ruled that, when the required tax invoice along with E-way bill are produced before passing the seizure as well as detention order, the proceedings should not be initiated. Hence, the writ petition was allowed, impugned orders were set aside by the Allahabad HC and the matter was remanded to the first appellate authority to pass a fresh order.
Background of the Case
The petitioner is a proprietorship concern engaged in the business of manufacturing and sale of laminated papers. In the normal course of business, the goods were loaded on Truck for dispatch from Muzaffarnagar to Rajasthan along with tax invoices, E-way Bills and GR. During transit, the goods were intercepted on 25.1.2022 and Form GST MOV-2 was issued by respondent no. 3 after recording the statement of the truck driver and after physical verification Form GST MOV-04 was issued on the ground that the goods were found to be different than mentioned in accompanying documents.
Thereafter a show cause notice was issued in Form GST MOV-07 on 27.1.2022. The petitioner submitted reply and being not satisfied with the same, penalty was imposed by order dated 27.1.2022.
Thereafter the petitioner filed an appeal against the said order, which was also dismissed by the appellate authority vide impugned order dated 2.7.2022.
Hence the present writ petition was filed by the petitioner M/s. Galaxy Enperprises in Allahabad HC.
Submission of the Counsel of the Petitioner
It is admitted that the goods were moving along with tax invoice no. 139 dated 25.1.2022 along with e-way bill but before physical verification or issuance of show cause notice or passing the detention as well as seizure order, another tax invoice no. 140 dated 25.1.2022 along with e-way bill was produced rectifying the mistake. But still notice was issued and penalty order was passed, which has been affirmed by the appellate authority without proper consideration of claim made by the petitioner.
He further submitted that, once before issuance of show cause notice or passing of detention as well as seizure order, the genuine tax invoice along with e-way bill was produced and the mistake was rectified, the authorities ought not to have initiated the proceeding.
He submitted that the petitioner has duly explained the discrepancy, which has been occurred due to clerical error of his accountant and in support thereof, also filed an affidavit of the accountant but none of the authorities have considered the same. The petitioner has no intention to evade the payment of tax. Hence, the impugned order is not justified in the eyes of law and same is liable to the quashed.
Submission of the Counsel of the Respondent
At the time of detention of goods in question, the goods were found different and quantity was also different as mentioned in the accompanying documents such as e-way bill and tax invoices. If the goods were not detained, the petitioner would have succeeded in evading the payment of legitimate tax to be paid to the State. He further submitted that subsequent tax invoice no. 140 dated 25.1.2022 is clear cut breach of the provisions specifically mentioned under Rule 31 (1) of UP GST Rules. He prays for dismissing the writ petition.
Judgement of the Allahabad HC
On perusal of the records, it transpires that the goods in question were in transit during its onward journey from Muzaffarnagar, U.P. to Bhilwada, Rajasthan and the same were intercepted on the ground that the goods found different as mentioned in the accompanying documents. But before detention and seizure order could be passed, the petitioner produced another bill i.e., tax invoice no. 140 of 25.1.2022 along with e-way bill.
The state GST authorities have not accepted the documents on the ground that same were produced after the movement of goods. But lost the site of the fact that the discrepancies were cured before the detention or seizure order could be passed.
Once the documents were produced before passing of the detention / seizure order, the authorities ought not to have proceeded further as held by the Division Bench judgement of this Court in the case of M/S Axpress Logistics India Pvt. Ltd and M/s Bhumika Enterprises. Since the Division Bench has specifically decided the said issue in an identical matter way-back in the year 2018, the impugned order is not justified.
Hence, the writ petition was allowed, impugned orders were set aside and the matter was remanded to the first appellate authority to pass a fresh order.
Case Title: M/s. Galaxy Enterprises vs State of U.P & Ors; Writ Tax No.1412/2020; Date of Order: 6 November 2023
To Access the relevant CBDT Notification on Detention & Confiscation of goods CLICK HERE
To Read the recent Judgement of Patna HC against denial of Stay Right CLICK HERE
Also Read:
CBIC Notification 53/2023-CT: GST Amnesty Scheme to Appeal Against Orders Passed until 31 March 2023
Мy spouse and I stumbled ovｅr here by а different page and
thought I maʏ as well check tһingѕ out. I lіke what I see so now i’m
following you. Look forward to l᧐oking into your web page again.
Thanks for Liking and following my page. Here we share tax related updates on regular basis. Please keep on visiting the site and motivating me like this. Have a good day both of you.